Hi Guys.
What is litle discussed often in Forex is how to ride the wave and take profits along the way.
Can I get some suggestions on different ways I can do this. The thing is, there are ways but each of them while can give rewards, also add complexities and drawbacks.
You could for example simply think your trade will go as high as 4x break-even, but what if it doesn’t? What I’m looking for is the best method to be able to not only target the best case scenario, but also take profits if if the price doesn’t even get close to there.
Here are two of many different methods and I am keen to hear any comments or suggestions on what other methods to use, or which of these two methods would be the best. Let’s say we are going long.
Option 1
Open 2 positions at same entry point
1st position 1:1 R/R and taking profit at 1:1 - this acts to take some profit off the table rather than a SL that get’s moved to break even.
Furthermore you can set this to close half the position off at 50% of the original 1:1 target, incase this ends up being a losing
trade that never reaches the 1:1 target, you can take some profits off if it reaches 50% of that target before it goes down and hits
the SL.
2nd position 1:1 R/R then move S:L to break-even then trail by amount of pips distance original 1:1 R/R distance. This position will keep running forever until the SL get’s hit, this is what helps milk the swing if it keeps going up.
So basically the 1st position acts to try scrape some profit off that the 2nd position may not bank in as it simply moves the SL to break-even.
Option 2
Open 3 positions each risking 0.33% of the account. Meaning total risk among 3 positions is about 1%
Position 1 - Targetting 1:1 Risk reward SL -10 pips TP +10 Pips
Position 2 - Targetting 1:2 Risk Reward SL -10 pips TP +20 Pips
Position 3 - Targetting 1:3 Risk reward SL -10 pips TP +30 Pips
So you have 3 profit targets. This while may appear will give a combined 1:3 Risk/Reward, actually only gives a 1:2 Risk/Reward after maths is done.
Example
Position 1 Hits 10 pip target 0.33% profit.
Position 2 Hits 20 pip target 0.66% profit
Position 3 Hits 30 pip target 0.99% Profit
0.33 + 0.66 + 0.99 = 2%.
You can repeat this option, but have more targets, such as 5 or 6 - as sometimes price can swing high enough to allow for this.
Issue may be large fee’s everytime those positions all hit the SL at the same time? What do you guys think on this point?
Option 1 Pros - you can take some profits in the short term, and then from them you trail and the sky is the limit until your TSL gets hit
Option 1 Cons - Volatility can end up taking your TSL out too early, and then price swings back and skyrockets again - missed opportunity
Option 2 Pros - Set your profit points how you like, no need to worry about getting stopped out by volatility as you ride the wave as each position has it’s own target
Option 2 Cons - May pay lots of fees if all positions hit SL, and if you have 3 Profit points you can’t actually take a profit factor of 3, it’s really a profit factor of 2 once you do the maths.
If only 1 position reaches it’s targets and the 2 others hit the SL, you can end up losing money or simply making no profit at all
Those are the 2 common options I have seen people use, and option 1 appears to be more favorable.
If anybody else has any different ideas on any setups to target multiple profit points please do share them.